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THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

CROWDFUNDING INDUSTRY REPORT

Market Trends, Composition and Crowdfunding Platforms

May 2012

Research Report Abridged Version

ABOUT THIS RESEARCH

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

This abridged report is compiled from data included in our complete Crowdfunding Industry Report which provides an in-depth

analysis of crowdfunding market trends and composition, and an overview of Crowdfunding Platforms (CFPs) that explains their

functionality and the different models at play.

The Crowdfunding Industry Report is based on two sources of data. The Crowdfunding Industry Survey, conducted in conducted by Crowdsourcing LLC’s research and advisory reports aimed at providing reliable and factual information on the global crowdfunding industry.

We received over 170 responses to our industry survey where we selected participants from Crowdsourcing.org’s Directory of

THE REPORT CONTAINS FOUR SECTIONS:

Crowdfunding Sites which contained 452 active crowdfunding platforms at the time the survey was conducted. As the basis for the analyses, we selected 135 submissions from CFPs that we determined were comprehensive and of high-integrity. The 135 submissions provided extensive data relating to CFPs crowdfunding volumes, operations and key constituents (e.g., Funders and Fundraisers) for the calendar years 2009, 2010 and 2011. Our analyses of this rich data set has resulted in this research report on the crowdfunding industry.

1. An overview of massolution’s methodology for data gathering and analysis.

2. An analysis of market growth, composition and key statistics.

3. An overview and categorization of crowdfunding models.

4. An analysis of the value proposition, functionality and approach.

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© 2012 Crowdsourcing, LLC

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research@crowdsourcing.org

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FOUNDING RESEARCH SPONSOR

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THE INDUSTRY WEBSITE TM

We represent nearly 50 public companies and numerous private companies in various industries. We are proud to be the Founding Sponsor of Crowdsourcing.org and are institutionally committed to the Crowdfunding industry and being part of its success.

EG&S offers its clients legal services in a broad range of business related matters. Currently celebrating its 20th year, the Firm specializes in many areas of commercial law, including corporate and securities – ‘33 Act and ‘34 Act representation, reverse mergers,

Over the history of the Firm, we have developed an expertise in establishing novel securities programs (like SPACs, Registered Directs, PIPEs and Reverse Mergers) and we expect to make a similar impact on Crowdfunding.

Our industry expertise includes: information technology, software

combination representations) and #4 for IPOs (issuer counsel).

150 East 42nd Street New York New York 10017 Tel:212 370 1300 Fax:212 370 7889

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Contact: Douglas S. Ellenoff Ellenoff@egsllp.com www.EGSllp.com

© 2012 Crowdsourcing, LLC

alternative energy, consumer products, and business services throughout the world. We represent portals and entrepreneurs, investment managers, broker dealers, hedge funds, investment work on numerous corporate and partnership tax issues. The Firm also has a strong commercial litigation department that supplements our other practice areas. The Firm has clients throughout the world including Greece, England, the Netherlands, China and India and Israel.

world including Greece, England, the Netherlands, China and India and Israel. | research@crowdsourcing.org P A G
world including Greece, England, the Netherlands, China and India and Israel. | research@crowdsourcing.org P A G

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research@crowdsourcing.org

PAGE 3

RESEARCH SPONSOR

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

GATE Technologies, LLC is an innovative technology company that creates new market infrastructure to deliver fully integrated

GATE Technologies, LLC is an innovative technology company that By developing fully integrated electronic marketplaces, GATE has created a complete end to end solution by combining a regulatory compliant transactional platform, settlement and clearing services with global connectivity, enabling investors and institutions to trade to improve capital formation for lower middle market issuers and social enterprises while bringing a broad range of market participants access to impact investments and information.

GATE Technologies gives market participants the transparency, regulatory oversight while standardizing processes in which transactions and settlement occur. www.gatetechnologies.com

The GATE Platform is a sophisticated yet user friendly technology

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© 2012 Crowdsourcing, LLC

GATE Impact LLC is the impact investing-focused subsidiary of GATE Technologies, LLC. GATE Impact offers utility and infrastructure to the rapidly emerging crowdfunding industry, providing market infrastructure and related services for the emerging impact investment industry – public and private investments with a on the technology foundation of the GATE Platform, a regulatory- compliant market infrastructure for the transacting of restricted, or exceed all regulatory standards and is easily adapted to handle both primary and secondary transactions in new asset classes. www.gateimpact.com

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transactions in new asset classes. www.gateimpact.com | research@crowdsourcing.org GATE Technologies 5 Penn Plaza,

research@crowdsourcing.org

GATE Technologies

5 Penn Plaza, Suite 2301 New York, NY 10001

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RESEARCH SPONSOR

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THE INDUSTRY WEBSITE TM

J.H. Cohn has been actively monitoring the marketplace’s reaction to the 2012 Jumpstart Our Business Startups Act (“JOBS Act”), including Crowdfunding. Through the progression of the JOBS Act, the Firm has participated in dialogue with market innovators and interested investors. For companies following this migration with interest, we offer updates, insight on how companies can prepare to take advantage of all aspects of the JOBS Act, and access to organizations and market leaders spearheading the movement to develop this alternative capital source.

States, J.H. Cohn LLP specializes in audit, accounting, tax, and business consulting services for public and private companies and remained constant: to provide a highly personalized approach to each client, with intelligent guidance and solutions driven by technical and industry expertise that positively affect client strategic insight, proactive leadership, unwavering integrity, and a genuine concern for clients and their businesses.

New York Contact info:

J.H. Cohn LLP 1212 Avenue of the Americas 7 th Floor

212-297-0400

www.jhcohn.com

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Contact: Richard Salute, CPA rsalute@jhcohn.com

© 2012 Crowdsourcing, LLC

To help clients think and act across national boundaries, J.H. Cohn is an independent member of Nexia International, a global network of independent accountancy, tax, and business advisors and the tenth largest provider of audit and advisory services worldwide. The Firm California.

For more information, visit our website at www.jhcohn.com.

California. For more information, visit our website at www.jhcohn.com. | research@crowdsourcing.org P A G E 5

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research@crowdsourcing.org

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PARTICIPATING CFPs

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

We would like to thank the participating companies for an unprecedented response and for providing extensive data.

an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |

m.4.2.014

unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org

© 2012 Crowdsourcing, LLC

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unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org

research@crowdsourcing.org

unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org
unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org

PARTICIPATING CFPs

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

We would like to thank the participating companies for an unprecedented response and for providing extensive data.

an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |

m.4.2.014

response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A

© 2012 Crowdsourcing, LLC

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and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E

research@crowdsourcing.org

and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E

PAGE 7

PARTICIPATING CFPs

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

We would like to thank the participating companies for an unprecedented response and for providing extensive data.

an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |

m.4.2.014

response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A

© 2012 Crowdsourcing, LLC

and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E

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research@crowdsourcing.org

and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E

PAGE 8

PARTICIPATING CFPs

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

We would like to thank the participating companies for an unprecedented response and for providing extensive data.

an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |

m.4.2.014

response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A

© 2012 Crowdsourcing, LLC

and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E

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research@crowdsourcing.org

and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E

PAGE 9

PARTICIPATING CFPs

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

We would like to thank the participating companies for an unprecedented response and for providing extensive data.

an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |
an unprecedented response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC |

m.4.2.014

response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A
response and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A

© 2012 Crowdsourcing, LLC

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and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E

research@crowdsourcing.org

and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E
and for providing extensive data. m.4.2.014 © 2012 Crowdsourcing, LLC | research@crowdsourcing.org P A G E

PAGE 10

KEY MESSAGES

1. INTRODUCTION AND METHODOLOGY

market on a funds-raised basis. Secondary research provided estimate.

3. CROWDFUNDING MODELS

the largest sum of money per campaign.

Donation-based and reward-based crowdfunding for cause- based campaigns that appeal to funders’ personal beliefs and passions perform best (e.g., environment).

m.4.2.014

© 2012 Crowdsourcing, LLC

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

2. MARKET GROWTH AND COMPOSITION

As of April 2012, based on Crowdsourcing.org’s Directory of Sites, the most complete database of crowdfunding sites, there were 452 crowdfunding platforms active worldwide. The majority of them are in North America and Western Europe. Together, these platforms raised almost $1.5 billion and successfully funded more than one million campaigns in 2011.

4. CFPs VALUE PROPOSITION, FUNCTIONALITY & APPROACH

The primary revenue model for crowdfunding platforms is percentage based commission on funds paid out to entrepreneurs. A few also generate income by offering white label solutions and cash management by maintaining responsibility for netting and settlements.

Our research shows that campaign metrics such as launch to fund (L2F) differ greatly between crowdfunding models.

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research@crowdsourcing.org

PAGE 11

1. INTRODUCTION AND METHODOLOGY

CATEGORIZATION OF CROWDFUNDING PLATFORMS

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

1. INTRODUCTION AND

METHODOLOGY

THE INDUSTRY WEBSITE TM 1. INTRODUCTION AND METHODOLOGY 2. MARKET GROWTH AND COMPOSITION Our survey respondents

2. MARKET GROWTH

AND COMPOSITION

Our survey respondents were asked more than 30 detailed functionality of their platforms and their fundraising activities for the calendar years 2009, 2010 and 2011. Further data was gathered via direct communications with 135 CFPs and report is aggregated or averaged.

crowdfunding platforms globally in 2011. The participating CFPs

3. CROWDFUNDING

MODELS

4. CFPs VALUE PROPOSITION, FUNCTIONALITY & APPROACH

collectively accounting for more than US$575 million of funds from additional sources. Finally, to complete our estimate of the overall size of the market, we developed a forecasting raised via crowdfunding platforms.

The sample of participating CFPs survey respondents is very diverse and therefore we are able to compare and contrast the characteristics of the different types of crowdfunding models and compare each individually by region. The data set represents all four categories of crowdfunding across all regions of the world. Although our sample is robust and present a holistic view of the crowdfunding market.

We ensured the accuracy of our analyses by excluding applicable, this is indicated alongside the charts by showing the sample size of respondents used for each element of analysis.

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PAGE 12

1. INTRODUCTION AND METHODOLOGY

THERE WILL BE OVER 530 CFPs BY DECEMBER 2012

NUMBER OF CFPs WORLDWIDE

138%

100% 2007 2008
100%
2007 2008

GROWTH 38%

 

452%

 

294%

 

200%

 

2009

2010

2011

45%

47%

54%

200%   2009 2010 2011 45% 47% 54% 557% 470% 1 2 2012 (Est.) 60% Source:

557%

470%

1

2

2012 (Est.)

60%

Source: Based on Crowdsourcing.org Directory of Sites as of April 2012

m.4.2.014

© 2012 Crowdsourcing, LLC

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

536

Estimated number of CFPs as of Dec 2012

452

The total number of CFPs as of Apr 2012

1 Based on Crowdsourcing.org Directory of Sites as of April 2012.

2 Estimates are based on historical market projections and do not take into account extraordinary events, (e.g., passing of US Crowdfunding legislation) which are, based on available data, unpredictable.

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research@crowdsourcing.org

PAGE 13

2. MARKET GROWTH AND COMPOSITION

MARKET GROWTH AND COMPOSITION

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

1. INTRODUCTION AND

METHODOLOGY

2. MARKET GROWTH AND COMPOSITION

AND METHODOLOGY 2. MARKET GROWTH AND COMPOSITION 3. CROWDFUNDING MODELS 4. CFPs VALUE PROPOSITION,

3. CROWDFUNDING

MODELS

4. CFPs VALUE PROPOSITION, FUNCTIONALITY & APPROACH

Almost $1.5 billion was raised by CFPs world-wide in

2011.

North America was the largest market for fundraising.

3 years, primarily driven by donation-based and lending-based platforms. Reward-based platforms are growing at the fastest rate but from a smaller base.

While the CFPs formed some years ago are still growing in terms of funds raised, new market entrants are securing a larger relative percentage of new funds raised, consistent with a high growth, early stage industry.

Funds pledged to funds paid-out in aggregate has pay-out a much higher percentage of funds pledged.

As of April 2012, 452 CFPs were operating globally.

Market composition in each category platforms are higher in numbers in Europe than in North America).

Reward-based is the largest category in terms of overall number of CFPs, while category by net year-on-year growth.

North America leads other regions in terms of the total number of crowdfunding platforms, however Europe is gaining percentage share within the market in aggregate.

More than 1 million successful campaigns were run by CFPs in

2011.

The majority of these campaigns were in the donation-based based campaigns were, on average, much larger in size in terms of funds raised.

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© 2012 Crowdsourcing, LLC

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research@crowdsourcing.org

PAGE 14

2. MARKET GROWTH AND COMPOSITION

DRIVEN BY ABOVE-AVERAGE GROWTH IN REWARD-BASED AND EQUITY-BASED CROWDFUNDING, WE EXPECT THE TOTAL FUNDING VOLUME TO DOUBLE IN 2012

$1,470 million

Estimated total funding volume for 2011.

primary and secondary research.

estimated on the basis of our crowdfunding site database.

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$2,806 million

Estimated total funding volume for 2012. Our

based and reward- based crowdfunding

based

donation-based crowdfunding.

© 2012 Crowdsourcing, LLC

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

GROWTH IN WORLDWIDE FUNDING VOLUME

(millions of dollars) Research based estimate

854

530 2009 2010
530
2009 2010

GROWTH 61%

Source: Massolution

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research@crowdsourcing.org

1,470

2010 GROWTH 61% Source: Massolution | research@crowdsourcing.org 1,470 2011 72% 2,806 2012 (Est.) 91% P A

2011

72%

2,806

2012 (Est.)

91%

PAGE 15

2. MARKET GROWTH AND COMPOSITION

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM
MORE THAN 450 CFPs ARE ACTIVE WORLDWIDE; THE MAJORITY BASED IN NORTH AMERICA AND EUROPE
MORE THAN 450 CFPs ARE ACTIVE WORLDWIDE; THE MAJORITY BASED IN NORTH AMERICA AND
EUROPE
S
N
F
NUMBER OF CFPs, 2012
6 BELGIUM
D
L
E
I
4 POLAND
C
44 UNITED KINGDOM
A
191 UNITED STATES
R
H
5 SWITZERLAND
17 CANADA
29 NETHERLANDS
6 ITALY
R
3
SWEDEN
D
3
DENMARK
6 PORTUGAL
I
3
IRELAND
2 RUSSIA
F
3
FINLAND
28 FRANCE
C
2
CZECH REP.
A
1
AUSTRIA
4 CHINA
E
1
ESTONIA
20 GERMANY
1 ISRAEL
L
1
LATVIA
18 SPAIN
N
1
NORWAY
R
1
ROMANIA
6 INDIA
H
1
HUNGARY
2 MEXICO
1 HONG KONG
3 JAPAN
1 HAITI
3 SOUTH AFRICA
1 PHILLIPINES
12 AUSTRALIA
2 ARGENTINA
1 ZAMBIA
1 CHILE
21 BRAZIL
6 NEW ZEALAND

Source: Based on Crowdsourcing.org Directory of Sites as of April 2012

m.4.2.014

© 2012 Crowdsourcing, LLC

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2. MARKET GROWTH AND COMPOSITION

REWARD-BASED IS THE LARGEST CROWDFUNDING CATEGORY, WHILE EQUITY- BASED IS THE FASTEST GROWING

The lending-based category is the smallest in terms of the number of platforms.

Donation-based and lending-based crowdfunding are the reward-based category.

European platforms.

Note: This research was conducted during the active debate in the US Congress over the JOBS Act, which contained a provision for a crowdfunding exemption. The passing of this exemption will likely have a profound effect on growth of CFPs in the

m.4.2.014

© 2012 Crowdsourcing, LLC

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

GROWTH IN NUMBER OF CFPs BY CATEGORY

Based on a sample of 143 CFPs

143 40 41% CAGR DONATION- BASED 88 62 30 79% CAGR REWARD- BASED 53 25
143
40
41% CAGR
DONATION-
BASED
88
62
30
79% CAGR
REWARD-
BASED
53
25
23
36
20
50% CAGR
21
18
LENDING-BASED
17
10
10
10
21
114% CAGR
7
15
6
9
EQUITY-BASED
10
4
3
1
2007
2008
2009
2010
2011
Source: Massolution

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PAGE 17

2. MARKET GROWTH AND COMPOSITION

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

MORE THAN 1 MILLION SUCCESSFUL FUND-RAISING CAMPAIGNS WERE RUN BY CFPs IN 2011

TOTAL NUMBER OF CAMPAIGNS, 2011 532K 654K NORTH EUROPE AMERICA 1K OTHER 1,187K REGIONS WORLDWIDE
TOTAL NUMBER OF CAMPAIGNS, 2011
532K
654K
NORTH
EUROPE
AMERICA
1K
OTHER
1,187K
REGIONS
WORLDWIDE

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Source: Massolution

PAGE 18

3. CROWDFUNDING MODELS

CROWDFUNDING MODELS

1. INTRODUCTION AND

METHODOLOGY

2. MARKET GROWTH

AND COMPOSITION

based and lending-based crowdfunding) is most effective for digital goods such as applications or computer games, category raise above $25,000.

Donation-based and reward-based crowdfunding for cause- based campaigns that appeal to funders’ personal beliefs

m.4.2.014

© 2012 Crowdsourcing, LLC

3. CROWDFUNDING

MODELS

© 2012 Crowdsourcing, LLC 3. CROWDFUNDING MODELS THE INDUSTRY WEBSITE TM 4. CFPs VALUE PROPOSITION,
THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

4. CFPs VALUE PROPOSITION, FUNCTIONALITY & APPROACH

and passions perform best (e.g., environment, community, faith). Donation-based and reward-based crowdfunding for art and performing arts projects drive less funding volume than the mainstream media suggests. The campaigns in these categories are much smaller, with two-thirds of them generating less than $5,000.

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PAGE 19

3. CROWDFUNDING MODELS

EQUITY-BASED CROWDFUNDING RAISES THE LARGEST AMOUNT OF FUNDS PER PROJECT

platforms were raised for projects that drew less than that drew $250,000 or more in funding.

platforms, crowdfunding shows to be a viable alternative for raising capital to fund small businesses and start-ups.

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© 2012 Crowdsourcing, LLC

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

FUNDS PAID OUT PER EQUITY-BASED PROJECT

Percentage, based on sample of 10 CFPs, 2011

 
 

<$10,000

6%

>$250,001

21%

$10,001-$25,000

10%

 
26%
26%

$50,001-$100,000

$25,001-

$50,000

$100,001-

16%

$250,000

21%

Source: Massolution

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PAGE 20

3. CROWDFUNDING MODELS

DONATION-BASED AND REWARD-BASED

CROWDFUNDING DRAW LOWER LEVELS OF

FUNDING PER PROJECT THAN LENDING-

BASED AND EQUITY-BASED PROJECTS

Of the funds raised on donation-based and reward-based to projects that draw more than $10,000 in funding. The reward-based crowdfunding platforms are paid out to projects that raise between $5,000 and $10,000.

m.4.2.014

© 2012 Crowdsourcing, LLC

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

FUNDS PAID OUT PER PROJECT FOR DONATION- BASED AND REWARD-BASED PROJECTS

 

Percentage, based on a sample of 25 CFPs, 2011

 

>$10,001

10%

$7,501-

$10,000

<$2,500

9%

28%

28%

35%

$5,001-

$7,500

18%

$2,501-$5,000

Source: Massolution

 

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PAGE 21

4. CFPs VALUE PROPOSITION, FUNCTIONALITY AND APPROACH

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

4. CFPs VALUE PROPOSITION, FUNCTIONALITY AND APPROACH

1. INTRODUCTION AND

METHODOLOGY

2. MARKET GROWTH

AND COMPOSITION

Commissions are generally lower in North America compared of competition.

a number of platforms generate additional income by offering and maintenance fee.

m.4.2.014

© 2012 Crowdsourcing, LLC

3. CROWDFUNDING

MODELS

4. CFPs VALUE PROPOSITION, FUNCTIONALITY & APPROACH

4. CFPs VALUE PROPOSITION, FUNCTIONALITY & APPROACH of the funding goal and 3.18 weeks on average

of the funding goal and 3.18 weeks on average to raise the donation-based campaigns.

method.

Platform reliability (i.e., up-time) is a differentiating factor of funds from countries, other than the home base of the CFPs is an important differentiating factor for donation-based and reward-based CFPs.

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PAGE 22

4. CFPs VALUE PROPOSITION, FUNCTIONALITY AND APPROACH

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

FEE BASED ON A PERCENTAGE COMMISSION OF FUNDS PAID OUT

Commissions are generally lower in North America and competition in North America and Europe compared with other countries. We did not observe notable differences between different types of platforms, or between recently founded and older platforms.

the region of $15 (median), per campaign.

for each geographic area, as CFPs were able to present their approach to both partially-funded and fully-funded campaigns. For instance, a number of platforms charge higher commissions for partially-funded campaigns, but still pay-out funds raised to fundraisers even if a funding goal is not reached.

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© 2012 Crowdsourcing, LLC

COMMISSIONS EARNED BY CFPs Based on funds raised ALL 42% 58% NORTH AMERICA 60% 40%
COMMISSIONS EARNED BY CFPs
Based on funds raised
ALL
42%
58%
NORTH AMERICA
60%
40%
EUROPE
36%
64%
OTHER REGIONS
33%
67%
Based on a fully-funded goal
ALL
63%
37%
NORTH AMERICA
47%
53%
EUROPE
67%
33%
OTHER REGIONS
78%
22%
YES
NO
Source: Massolution
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PAGE 23

4. CFPs VALUE PROPOSITION, FUNCTIONALITY AND APPROACH

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

LAUNCH TO COMPLETION TIME OF LENDING-

BASED CAMPAIGNS IS ON AVERAGE HALF

THAT OF EQUITY-BASED AND DONATION-

BASED CAMPAIGNS

types of platforms. These statistics lead us to believe that campaigns on average do not accelerate after certain funding accelerates toward the end of a project.

m.4.2.014

© 2012 Crowdsourcing, LLC

AVERAGE CROWDFUNDING CAMPAIGN TIMEFRAMES Weeks, based on sample of 83 CFPs 9.1 8.2 LAUNCH TO
AVERAGE CROWDFUNDING CAMPAIGN
TIMEFRAMES
Weeks, based on sample of 83 CFPs
9.1
8.2
LAUNCH TO COMPLETION
4.8
10.0
10.2
2.0
2.5
FIRST 25% MILESTONE
2.3
2.9
3.6
3.3
3.1
LAST 25% MILESTONE
2.6
3.6
3.3
ALL
EQUITY-
LENDING-
REWARD-
DONATION-
BASED
BASED
BASED
BASED
Source: Massolution
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PAGE 24

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

TERM

DEFINITION

CAGR

Compound Annual Growth

Crowdfunding platform (CFP)

An operator of a funding platform that facilitates monetary exchange between funders and fundraisers.

monetary exchange between funders and fundraisers. Donation-based crowdfunding Crowdfunding model where funders

Donation-based crowdfunding

Crowdfunding model where funders donate to causes that they want to support, with no expected compensation (i.e., philanthropic or sponsorship based incentive).

(i.e., philanthropic or sponsorship based incentive). Funded campaign A crowdfunding campaign that has achieved

Funded campaign

A crowdfunding campaign that has achieved its funding goal and completed distribution of funds.

Pledged funds

Amount of money that has been committed by funders to crowdfunding campaigns. Pledged funds may turn into raised funds if a campaign is successful.

Raised funds

Amount of money that has been distributed through a CFP within a stated period of time.

distributed through a CFP within a stated period of time. m.4.2.014 © 2012 Crowdsourcing, LLC |

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THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

CROWDFUNDING INDUSTRY REPORT - FULL CONTENTS LIST

This complete Crowdfunding Industry Report provides in an in-depth analysis of crowdfunding market trends and composition, and

an overview of Crowdfunding Platforms (CFPs) that explains their functionality and the different models at play.

1. INTRODUCTION AND METHODOLOGY

Research methodology Breakdown of number of participating CFPs by category and region Breakdown of participating CFPs in terms of funds raised by category and region

2. MARKET GROWTH AND COMPOSITION

Growth in worldwide funding volume and composition by funds raised, category, year, and region Forecast of funds raised for 2012 by category Market growth and composition by number of CFPs, category, year, and region Market growth and composition by number of campaigns, year, and region Average campaign size by category Total funds raised by CFP maturity Concentration of funds raised by Top 5 and Top 10 CFPs Analysis of funds pledged compared to funds paid out Location of CFPs globally Percentage breakdown of CFPs by region and category

m.4.2.014

© 2012 Crowdsourcing, LLC

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research@crowdsourcing.org

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

CROWDFUNDING INDUSTRY REPORT - FULL CONTENTS LIST

This complete Crowdfunding Industry Report provides in an in-depth analysis of crowdfunding market trends and composition, and

an overview of Crowdfunding Platforms (CFPs) that explains their functionality and the different models at play.

3. CROWDFUNDING MODELS

Funds paid out for Reward-based and Donation-based categories by industry sector

4. CFPs VALUE PROPOSITION, FUNCTIONALITY AND APPROACH

Commissions earned by CFPs White Label offerings by CFP category CFP’s level of involvement in contracts Average crowdfunding campaign timeframes Analysis of the number of times Funders and fundraisers participate in campaigns and on the same platform Use of escrow accounts and forms of payment methods Top differentiating factors offered by CFP by category

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PAGE 27

THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

In millions of US dollars

$1,470

$827 $575 SURVEY RESPONDENTS LARGE CFPs SMALL CFPs TOTAL MARKET
$827
$575
SURVEY RESPONDENTS
LARGE CFPs
SMALL CFPs
TOTAL MARKET
SURVEY RESPONDENTS LARGE CFPs SMALL CFPs TOTAL MARKET CFPs that provided their total raised funds in

CFPs that provided their total raised funds in the survey, or reported it publicly. This number reported without any

m.4.2.014

it publicly. This number reported without any m.4.2.014 Each CFP was modelled individually based on key

Each CFP was modelled individually based on key metrics, market growth dynamics and

other characteristics for

a number of large CFPs

that did not provide data

in order to estimate the total funds.

© 2012 Crowdsourcing, LLC

to estimate the total funds. © 2012 Crowdsourcing, LLC The average amount of funds raised by

The average amount of funds raised by small platforms by category and by geography was calculated and multiplied

by the number of small CFPs that did not

participate in the survey.

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research@crowdsourcing.org

by the number of small CFPs that did not participate in the survey. | research@crowdsourcing.org P

PAGE 28

ACKNOWLEDGEMENTS

We would like to thank the participating CFPs for an unprecedented response and for providing extensive data. We would like to express a special thanks to the following CFPs for their participation in the

survey.

to the following CFPs for their participation in the survey. who is currently enrolled as a
to the following CFPs for their participation in the survey. who is currently enrolled as a
to the following CFPs for their participation in the survey. who is currently enrolled as a
to the following CFPs for their participation in the survey. who is currently enrolled as a
to the following CFPs for their participation in the survey. who is currently enrolled as a
to the following CFPs for their participation in the survey. who is currently enrolled as a
to the following CFPs for their participation in the survey. who is currently enrolled as a

who is currently enrolled as

a dual degree student at McCombs School

of Business (MBA, The University of Texas at Austin) and WHU – Otto Beisheim School of Management in Vallendar, Germany (MSc). Gerrit joined the massolution research team in December 2011 and assisted in the data collection and analysis. (gerrit@crowdsourcing.org)

A special thanks to our Founding Research

Sponsor, EG&S, and our Research Sponsors, GATE and J.H. Cohn, who, with

their support, have enabled the broad

distribution of this report.

support, have enabled the broad distribution of this report. THE INDUSTRY WEBSITE TM (CfPA) for the
support, have enabled the broad distribution of this report. THE INDUSTRY WEBSITE TM (CfPA) for the
THE INDUSTRY WEBSITE TM
THE INDUSTRY WEBSITE TM

(CfPA) for the dedication to the facilitation of a vibrant, credible and growing crowdfunding community and the mission to advocate on behalf of the industry. Uniting a broad-based coalition of industry participants, the association is committed to supporting research essential to the credible development of the industry and to establishing the highest ethical standards. The association’s collaborations and insights bureaucracy that can endanger innovation,

idea generation and job creation.

can endanger innovation, idea generation and job creation. www.crowdfundingprofessional.org FUTURE RESEARCH If you

www.crowdfundingprofessional.org

FUTURE RESEARCH If you would like to apply to participate in future research initiatives as an analyst or sponsor, please contact us.

m.4.2.014

© 2012 Crowdsourcing, LLC

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PAGE 29

ABOUT MASSOLUTION

Crowdsourcing.org is an initiative by massolution. This research has been produced by massolution, a unique research and advisory firm specializing in the crowdsourcing and crowdfunding industries. As an industry analyst, massolution tracks both the supply and demand side of each segment.

For crowdsourcing, massolution provides research and analysis covering Crowdsourcing Service Providers (CSPs), use cases and the adoption of crowdsourcing by enterprises.

For crowdfunding, massolution provides research and analysis covering Crowdfunding Platforms (CFPs), fundraisers or entrepreneurs, and funders or investors.

massolution’s unique data assets, fact-based research and proprietary intellectual property, drive forward-looking and actionable insights that inform the strategies and operations of business leaders and market stakeholders.

CROWDSOURCING, LLC

Email: research@crowdsourcing.org

Twitter: @Crowdsourcing_

www.massolution.com

www.crowdsourcing.org

CROWDSOURCING, LLC Email: research@crowdsourcing.org Twitter: @Crowdsourcing_ www.massolution.com www.crowdsourcing.org